Menu

Why you need to get on a monthly budget

I remember being at my wits end back in late 2014 around the holidays. We had just upgraded homes earlier in the year and were on our second home. Our final home though. Something we could grow into and live in forever.

Problem is we over spent on it and went a bit over our budget, which was something we often did, well, because we were never on a written monthly budget. So that was par for the course for us.

We made decent money, probably middle class to upper middle class income. But we never really tracked what we brought in monthly for income and what we paid out monthly in expenses.

We knew the general expenses that come with home ownership; mortgage, water, utilities, cable, plus our car payments and insurance. The typical regular monthly recurring bills we all have. It was the extra items we paid no attention to at all; shopping, eating out, entertainment, coffee, travel, etc.

Always Stressed About Money

Back to late 2014. My wife and I were always stressed out about money because we constantly felt like we were in debt. It never really felt like we had much liquid money in checking and/or savings. We had a mortgage. Her car was paid for but mine was not. I had student loan debt. We constantly had a credit card balance between $1,000 and $4,000. The credit card debt was always there. We’d throw $500+ at it with each bi-weekly paycheck, but as soon as it got low we seemed to figure out a way to rack up more. It was never going away.

The two of us were always stressing out because it felt like we always had a bill to pay and nothing left over for us. We would pay the card nearly every week. Cut back on going out. Then feel like we were burnt out because it was like we never went out and did anything and just paid bills. A credit card could solve all your worries.

Dave Ramsey Budget

I randomly heard someone talk about Dave Ramsey and his Total Money Makeover book. I started listening to his podcast daily and picking up on his “baby steps” and debt payoff strategies. Turns out, the first thing you have to do is get on a written budget! Well, duh. Seems easy enough. Why didn’t we think of that?

That is when I signed up with Mint.com, a free online personal budgeting software. I began tracking ALL of our expenses via this tool. Turns out my wife and I were spending way more than we made each month. We were spending nearly $400 more than we made each month in 2014. Pretty hard to climb out a of a hole that is sinking faster than you can dig, right?

We cut our spending dramatically in 2015 and did a complete 180. We were cutting virtually every expense we could in half. We were spending close to $900/month at the grocery store. Cut that back to $400. Scaled back our cable bill and cell phone plans. Cut back on going out and gave ourselves a budget we had to stick with monthly. It still allowed us to go out but we had to stay within our budget if we did go out once a week. In 2015 we saved nearly $1,000 more than we made each month!

Budgeting is Hard Work, But Worth the Effort

It wasn’t easy at first but once we got used to budgeting and sticking to it, it became seamless. Sure there were hiccups along the way but we got better over time. As time goes on we’re getting even better and therefor saving more money. Luckily our incomes continue to rise as well, so that obviously helps tremendously. So far in 2016 we’re averaging a monthly savings amount of about $1,400. And that is after we’ve put about 20% into retirement savings.

Its Simple, Increase Your Income with a Budget

Moral of the story…you would be shocked at how much money you can save monthly and how much quicker you can move through debt if you just get on a monthly budget. Stick with it for a few months though because it is challenging at first. Most new things are for anyone. But you begin to develop a “budgeting” skill and get really good at it before you know it.

4 Comments for “Why you need to get on a monthly budget”

[…] plan. In the last few years I have begun partnering my strong retirement savings with frugal budgeting. I am now making more and spending way less than I did just a few years ago. I am trying hard to […]

[…] even more conservative. A lot of financial advisors would go one step further and suggest you only spend 25% of your monthly income AND get a 15-year fixed. This will help you tremendously, long-term, at achieving wealth and […]

[…] established an emergency fund until about 2 years ago. I started getting hooked on Dave Ramsey and we began to budget and manage our personal finances much more diligently. We now have no debt, other than our house, […]